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Show how the market demand curve is derived from individual demand curves (a) for a private good and (b) for a public good.
A firm is described as combining managerial coordination with market exchange. Analyze why does similar behavior occur in government bureaus? Explain.
Explain what is the underground economy? What is the impact on the underground economy of instituting a tax on a certain productive activity?
Explain how rent seeking can lead to a drop in production of goods. What role might underground economy play in lessening the drop in productive activities?
Which groups typically bear the costs and which groups enjoy the benefits of traditional public goods and special-interest legislation.
(Distribution of Costs and Benefits) Why are consumer interest groups usually less effective than producer lobbies in influencing legislation?
Why is this consistent with the concepts of the median voter and rational ignorance discussed in this chapter?
If the government sets the price of electricity at the socially optimal level, why is the net gain equal to triangle abc?
Ronald Coase points out that a market failure does not arise simply because people ignore the external cost of their actions. What other condition is necessary?
(Optimal Level of Pollution) Explain the difference between fixed-production technology and variable technology.
Why does a solution to the overharvesting of timber in the tropical rainforests require some form of international cooperation?
How does a lack of competition affect prices and output?
Now is the time to make a decision about relocating the manufacturing operation to the United States is fast-approaching.
What is the optimal output rule? What is a price-taker?
With your selected business in mind, determine if it is competitive, monopolistic competitive, an oligopoly, or pure monopoly.
Why would the government be opposed to a merger of two firms? How does the Justice Department decide which mergers to challenge?
(Antitrust Law and Enforcement) Discuss the difference between per se illegality and the rule of reason.
Compare and contrast the public-interest and special interest theories of economic regulation. What is the capture theory of regulation?
(Business Behavior and Public Policy) Define market power, and then discuss the rationale for government regulation of firms with market power.
Illustrate how economies of scale would enable Charles Cobbler to purchase the leather at a lower cost, C', than if it produces its own at cost C.
Many firms utilize both the concepts of outsourcing and economies of scope. Analyze the firm's decision in context of the theories developed in this chapter.
Look on the Economy page in the First Section or in Marketplace section. When you've found an article, try to analyze it using ideas developed in this chapter.
Discuss why would existing franchise owners have an interest in the maintenance of high application standards for new franchise owners?
Describe problems faced by health insurance companies as result of adverse selection and moral hazard. How do insurance companies try to reduce these problems?
Distinguish between hidden characteristics and hidden actions. Analyze which type of asymmetric information contributes to the principal-agent problem?